SoundExchange. ASCAP. GEMA. HFA. PRS. etc. What do all of these royalty collection societies have in common? They make an incredibly large amount of money from super-complicated copyright structures. Because the more complicated the structure and the less sophisticated the tracking and payout mechanisms, the more money piles up in unpaid, unallocated accounts.

These accounts often exceed hundreds of millions of dollars, with the interest alone enough to finance the salaries and overheads of these organizations.

There’s a reason why your Spotify payouts are inscrutable even to industry professionals. It’s simple: the more complex and unexplainable the royalty calculation, the less money you have to pay the artist. It’s really, really simple (and complex at the same time).

What happens to all of those unmatched, unpaid piles of money collected by royalty collection agencies (see #1)? They get divided amongst the largest music publishers and labels, even if the money doesn’t belong to them. Because smaller publishers, artists, and labels usually aren’t sophisticated, educated, or staffed well enough to claim what is theirs (or even know it exists).

(5) Complicated music copyright saves major radio broadcasters a ton of money.

You may know what a performance royalty on a recording means, but nobody else does, including members of Congress and their constituencies. Which means major broadcasters can successfully label an ill-understood royalty stream as a ‘tax,’ spend millions lobbying against it, and never expect to pay it in the future.

(6) Complicated music copyright benefits large streaming radio services like Pandora.

Pandora says they’re the victim of burdensome copyright requirements. But the reality is that they pay pennies to publishers, and try endless tricks to lower royalties in the courts and Congress. And none of that makes it back to the listener, who doesn’t really know or care what copyright is anyway.

Ever met an artist that understands YouTube copyright? Ever met a company that understands YouTube copyright?

Sadly, YouTube make billions on content it doesn’t even license, and it gets away with it. Because until an artist or rights owner claims their content, nothing is paid. And YouTube is always in the clear because of a hyper-complicated and unmanageable DMCA takedown process that is completely broken.

Ever get an intimidating letter from a lawyer? Well, half the time it’s dumb puffery designed to scare you, and isn’t based on the actual law. The same is true for royalty collection societies like PROs, who often send ‘nastygrams’ and threats designed to scare smaller companies into paying them money, even if technically money isn’t owed. It happens all the time because these companies don’t understand the complexities of music copyright law, and therefore act out of fear.

(9) Complicated copyright makes lawyers very wealthy.

The more billable hours and bulls*&t, the more money lawyers make. Which means, the more work they make up, the more money they get. And the more complex and inscrutable the laws on music copyright, the more you think you need them to figure it all out.

Not only that, the lawyers that know the most about complex royalty structures often owe their strongest allegiance to the companies that administer those royalties (see #8). See how this works?

(10) Complicated music copyright makes it easier to claim rights that don’t exist.

PROs spent millions arguing to federal judges that ringtones were public performances, just like a song played at a bar or club. They also spend millions to make companies pay blanket licenses for broadcasting, even on content that isn’t theirs to license. They make streaming services pay mechanicals, which are for physical reproductions.

Again… see how this game works?

(11) Complicated copyright is made more complicated by companies that jealously guard their data.

Imagine: a centralized database of music rights, accessible by anyone that wants to take out a license. Sound simple, but it will never exist. And the reason is that companies don’t want to share the information they’ve spend millions compiling, especially if it gives them less control over the rights they administer. Which means every time you want to license something, you have to search endlessly through disconnected databases and hope you found the right owners.

(12) Complicated copyright means you can always be sued by someone.

There’s always someone that can sue you for a license you didn’t think of. And as long as that’s the reality, every royalty collection service and copyright owner will have the upper hand. Because if the infraction is serious enough, you can get shut down tomorrow.

I’ve spent about half an hour every day doing it most of my adult life. I’m not saying I enjoy it, or that it’s easy, and your mileage definitely varies depending on your position in the food chain. But it’s part of the territory. And it was way harder before you could just mail everybody.

The only reason ordinary people suddenly are bitching about copyright is that everybody’s a publisher today. And most of them simply don’t understand the concept.

It is harder then it was, as the copyright “machine” has not kept up with changing times and realities of today..
I still believe the original idea of the copyright makes sense.. but over time TOO MANY band-aids and groups and levels of supposed control have been put in place to make it way overly convoluted.

For what some people do, it can be easy. The problem arises when you try and do something that hasnt been done for the last hundred years..

“every royalty collection service and copyright owner will have the upper hand”

So copyright-holders have the upper hand and yet they’re perennial victims? Sorry Paul, but I can’t roll with that. Gatekeepers have the upper hand. They always will. The publishers had it in the beginning because writers needed them to get their songs marketed on sheet music or placed in musical theater productions. The record labels had it for years because they controlled access to radio and retail. Now Google and Spotify and their ilk will control the market going forward. I’m not saying it’s a good thing, but entrenched interests spend a lot of time and money ensuring that they stay entrenched.

Copyright will remain complex for the same reason that immigration and divorce law are complex: because the government is far too involved in the music industry and has done everything to hinder songwriters’ and artists’ ability to protect their rights since they created the compulsory mechanical licensing scheme and right up through the DMCA. The government is acting like a corrupt referee in this game and the winners that they’ve decided to pick are the Internet companies. We will never have their lobbying power or meaningful access to elected officials. You really think anybody takes NARAS seriously? How many votes can they actually mobilize?

And for God’s sake leave the SoundExchange bashing out of it for a minute. They are doing a phenomenal job. They collected $600,000,000 from three very limited types of media while ASCAP, BMI, and SESAC collectively pulled in only two billion dollars between the three of them, and they’re licensing every major television network as well as commercial radio. If an artist is too damn ignorant of the business in which they have chosen to work to realize that they have money coming from SoundExchange then they are doomed anyway.

“every royalty collection service and copyright owner will have the upper hand”

Well, it depends on the context, of course. The point is that it’s extremely difficult to actually figure out the rules. That level of opaqueness opens vulnerability to lawsuits and infractions, even if there was no intent.

I’m confused, the issue is the government’s involvement all the while SoundExchange is doing a phenomenal job? SoundExchange is essentially a proxy for the government, so I’m a bit confused. Please clarify.

Man–I love your passion, but this post is borderline paranoid and completely lacking in calm reason. By the way, I am a Nashville music lawyer and my only “allegiance” is to my client—period. Over-billing is frowned upon by both my clients and the Tennessee Board of Professional Responsibility.

Instead of inciting a riot, perhaps encouraging readers to participate in the upcoming licensing study by the USCO (which begins the process of remedying the mess created by politicians) is a better path. Here’s a link to the USCO notice: http://www.copyright.gov/docs/musiclicensingstudy/.

Paul, for all the good that you do with disseminating information, your broad, sweeping statements here about disregard, neglect, and mismanagement about the ENTIRE digital music business is way over the top. It seems like your intent is to indict everyone in the chain, and that’s simply not responsible journalism. In your efforts to try to expose inconsistencies and greed, you also need to temper that with an explanation of the good systems, laws, and efforts that are in place…..and are being worked on. C’mon Paul, this type of ranting is irresponsible.

Copyright is not broken. Rather, the value of online music is miniscule because the labels refused licenses to secure services in the ’90’s. As a result a “free” black market developed. Once the cat was out of the bag, music lovers got used to the idea of free. The current devalued state of online music exists because it’s very hard to claw back value from what once became free.

If I only knew how to write an app, I could show you how uncomplicated it is. All I would need is like text blocks and some movable icons. Alas, I’m only a stupid old, music dinosaur who can’t code. I only understand this “complex” copyright system.

I find it rather troubling that your list of reasons starts off with an assertion that has almost no basis in fact. Indeed, when you unpack those facts, you’ll find that they undercut the very premise of your point.

Let’s start with the assumption that “music copyright” (which is really a horrible term that betrays a total lack of understanding of copyright law) is complicated. It is, principally because it isn’t a single “thing.” In its most basic form copyright law is focused on rights like reproduction/copying, distribution/sale and public performance. All of these impact “music,” itself a vague term it doesn’t distinguish between sound recordings and compositions and it is those distinctions that can make things complicated. But just because your initial premise is true doesn’t make the rest of your argument true.

Because “royalty collection societies” (again, your term) almost exclusively deal with only one of the rights under copyright law. So, for example, SoundExchange on collects royalties from the digital performance of sound recordings, ASCAP only collects royalties for public performance of compositions, HFA primarily handles royalties for reproduction of compositions (also known as mechanical rights).

You attribute the “incredibly large amounts of money” they may collect to the complexity of the copyright laws but that couldn’t be further from the truth. The money collected comes from the incredibly large number of licensees exploiting the applicable right that the society administers, which, as I pointed out, is usually just one right. And the money doesn’t just pile up–it is distributed to rights holders like recording artists, songwriters and publishers. To the extent the money is not distributed, it is because the society may not have accurate information to make a proper distribution, such as when multiple songwriters and publishers have rights in a composition but the share information the society has doesn’t equal 100%. When that is the case, the society makes every effort to get the accurate information to be able to make the distribution.

What you have completely missed with this broadside is that the collection societies act for the benefit of rights holders. They have no independent interest in holding or hoarding money. And they don’t benefit from the complexities of the copyright law. In fact, as recent events have laid bare, those complexities have adverse impacts on many societies, to the detriment of the stakeholders they serve.

Paul, I am a big believer in a robust debate and exchange of ideas. However, launching any debate or exchange with a fallacy of composition is not entirely constructive.

Complete self-contradiction.
After all the points explicating how copyright owners are victims of complexity and intentional miscalculation, suddenly “every royalty collection service and copyright owner will have the upper hand. Because if the infraction is serious enough, you can get shut down tomorrow.”

If the infraction is serious enough, you should get shut down, and fined.

You’re missing the point. In many cases, these are not bad actors that are running into problems. They are trying to figure out the rules, and moving forward with the general feeling that they have covered all the bases. But the hyper-complexity often means that all of the bases aren’t covered. And, even if the rights owner is aware of the infraction prior to launch, there is a financial incentive to wait until AFTER the product is launched to maximize the penalty. It happens all the time, but wouldn’t happen in a more collapsed, transparent licensing environment.

Businesses do better in environments where the rules are clear and penalties for breaking those rules predictable. Not one in which predatory or opportunistic rights owners lurk around for the right opportunity to pounce. That is not the setting for a healthy marketplace.

Re. #9 – which says, “Not only that, the lawyers that know the most about complex royalty structures often owe their strongest allegiance to the companies that administer those royalties (see #8). See how this works?”

That’s not quite right, since your lawyer is your advocate. Solidly. And many lawyers go into music specifically to defend artists from the big guys who seek to steal away all their royalties.

Songwriters easily manage their digital split sheets and music copyrights in real-time FREE at SongSplits http://www.songsplits.com to communicate each song’s ownership with all co-writers and business stakeholders including managers, attorneys, PROs, publishers and more via email and print 24/7.